This is a dismal return for any company, but for one in the business of advanced semiconductors, it is catastrophic. Microchips have become the lifeblood of the modern economy and industry revenues have doubled in a decade.
Just look at today’s hottest company to see what might have been. Four years ago, Intel and Nvidia were worth the same – today Nvidia is worth 30 times more. AMD, Intel’s traditional rival, is now more than twice as valuable. Arm, Britain’s most valuable tech company, has also overtaken the company.
Gelsinger passing the blame to his predecessors is somewhat fair. Intel, which launched the first commercial microchip in 1971 and became a household name through popularising the personal computer in the 1990s, has conspired to miss every large trend in the industry since then.
Once run by giants of Silicon Valley such as Gordon Moore and Andy Grove, this century the company has flipped through a series of leaders who prioritised short-term profit over industry leadership.
It gave up the chance to supply Steve Jobs with chips for the first iPhone, ceding the ground to Arm, which went on to dominate the smartphone industry. It helped develop a new process of chipmaking known as extreme ultraviolet lithography with Dutch equipment maker ASML, but declined to put the technology into use because it was too expensive.
The system, which involves impossibly accurate mirrors and lasers, turned out to be the only way to miniaturise transistors to today’s levels. The Taiwanese chipmaker TSMC snapped up the machines, leaving Intel in the dust. Now even ASML, which makes the machines that make chips, is worth more than Intel.
Intel also managed to miss out on the artificial intelligence revolution, allowing Nvidia’s own microchip technology to dominate the market. Companies such as Microsoft and Meta are now buying Nvidia chips by the barrel.
This all makes the task of turning Intel around a gargantuan – perhaps impossible – effort. Gelsinger has made a credible effort to try, vowing to invest heavily in cutting edge factories and rapid development of high-end microchips.
But questions should be asked of the Biden administration, which has made Intel the centrepiece of its plans to turn around America’s chip industry.
The US share of global semiconductor manufacturing has declined from 37pc in 1990 to 10pc today, with the difference shifting almost exactly to China and Taiwan. Given the chance of a war with the former over the latter, the US is desperate to reverse that trend and bring back home an industry it invented.